On November 6, the Public Company Accounting Oversight Board (PCAOB) announced that it is establishing a Center for Economic Analysis to study the role and relevance of the audit in capital formation and investor protection.
The PCAOB also named economist Luigi Zingales as the Center's founding director. Zingales is the Robert C. McCormack Professor of Entrepreneurship and Finance and the David G. Booth Faculty Fellow at the University of Chicago Booth School of Business.
"The Center for Economic Analysis, under the leadership of renowned economist Luigi Zingales, will play an integral role in advancing the PCAOB's goal to enhance the relevance and reliability of audits to better serve financial markets", said James R. Doty, PCAOB chairman.
The Center is expected to hire staff and begin operations in early 2014. It will advise the PCAOB on how economic theory, analysis, and tools can be better used to enhance the effectiveness of PCAOB program areas, including standard setting, inspections, and other oversight activities. Additionally, the Center will promote and encourage economic research relating to the role of the audit in capital formation and investor protection.
The Center will host a conference on economic research relating to the role of the audit in the capital markets in 2014. It will issue a call for research papers and provide more conference details in the near term.
"The PCAOB is committed to advancing its investment in and attention to the use of economic analysis in its rulemaking. The Center will focus on fostering more economic research in auditing topics and building economic and other analytical tools for use in the PCAOB's work to protect the investing public's interest in high quality auditing", Doty said.
Professor Zingales will maintain his position at the University of Chicago while overseeing the Center. In addition to his position at the University, Zingales is currently a faculty research fellow for the National Bureau of Economic Research, a research fellow for the Center for Economic Policy Research, and a fellow of the European Corporate Governance Institute. He also serves on the Committee on Capital Markets Regulation, which has been examining the legislative, regulatory, and legal issues affecting how public companies function.
"I am honored to serve as the Center's founding director and pleased that the PCAOB recognizes the significant contributions economic analysis can provide to auditing and the capital markets", said Professor Zingales.
Professor Zingales' research has earned him the 2003 BernÃ¡cer Prize for the best young European financial economist, the 2002 NASDAQ award for best paper in capital formation, and a National Science Foundation Grant in economics.
He received a bachelor's degree in economics, summa cum laude, from UniversitÃ Bocconi in Italy in 1987 and a PhD in economics from the Massachusetts Institute of Technology in 1992. He joined the Chicago Booth faculty in 1992.
Source: November 6, 2013, PCAOB News Release